CHAPTER 4 ------------------------------------------------- ANALYSIS OF FINANCIAL STATEMENTS 1. A firm wants to strengthen its financial position. Which of the following actions would increase its quick ratio? a. Offer price reductions along with generous credit terms that would (1) enable the firm to sell some of its excess inventory and (2) lead to an increase in accounts receivable. b. Issue new common stock and use the proceeds to increase inventories. c. Speed up the collection
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Fundamental Accounting Principles, Thirteenth Canadian Edition Concept Review Questions 1. Writing off a bad debt against the allowance does not reduce the estimated realizable value of a company’s accounts receivable because the write-off reduces the balances of both Accounts Receivable and Allowance for Doubtful Accounts by equal amounts so the difference between the two accounts remains the
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CHAPTER 20 Accounting for Pensions and Postretirement Benefits SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 20-1 Service cost $ 333,000,000 Interest on PBO 712,000,000 Return on plan assets (566,000,000) Amortization of prior service cost 13,000,000 Amortization of net loss 145,000,000 Pension expense $ 637,000,000 BRIEF EXERCISE 20-2 Ending plan assets $ 2,000,000 Beginning plan assets 1,780,000 Increase in plan assets 220,000 Deduct: Contributions
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Accounting Standards Board (FASB). 4. Outline the steps in the accounting cycle, and define double-entry bookkeeping and the accounting equation. 5. Explain the functions and major components of the four principal financial statements: the balance sheet, the income statement, the statement of owner’s equity, and the statement of cash flows. 6. Discuss how financial ratios are used to analyze a company’s financial strengths and weaknesses. 7. Describe the role of budges in a business.
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Accounting Week 1 homework • Chapter 1: Problem 1-1 a. Calculate the tax disadvantage to organize a U.S. business today as a corporation, as compared to a partnership, under the following conditions. Assume that all earnings will be paid out in cash dividends. Operating income (operating profit before taxes) will be $500,000 per year under either organizational form. The tax rate on corporate profits is 35% (Tc = 0.35), the average personal tax rate for the partners is also 35% (Tc=0.35), and
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calculated as the total lease payments (cash, incorporating any discounts or deposits) under the contract, spread evenly over the lease term. * Lease payment typically covers both interest and principal payments (just like a mortgage) * Balance sheet * Recognise an asset item (for pre-payments) or liability item (accrual for lease) due to the timing differences between cash payments and lease expense. Accounting in Operating Leases as Lessor * Continue to hold the asset in its books
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EDDY’S CARPET CLEANERS (B) & (C ) Worksheet For the Month Ended March 31, 2008 "Adjusted Trial Balance" "Income Statement" Account Titles Trial Balance Adjustments Balance Sheet Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Cash 2,500 - - - 2,500 - - - 2,500 - Accounts Receivable 5,900 - 700 - 6,600 - - - 6,600 -
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Act 101(Going Concern) 'Definition of the 'going concern' concept The 'going concern' concept directs accountants to prepare financial statements on the assumption that the business is not about to go broke or be liquidated (i.e. where the business closes and sells all the assets for whatever price they can get). So, unless there is significant evidence to the contrary, accountants will base their valuations and their reporting of financial data on the assumption that the business will remain
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Business Analysis Part II Megan Exantus MGT/521 September 28, 2011 Laurie Ryan Business Analysis Financial statements are made to show a company’s financial position, performance, and changes that will be made throughout the company that may deter any economic decisions. Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly related to
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above table, the liquidity ratios of Tootsie Roll Industries reveal that the company has $3.45 in current assets to pay for $1 of the current liabilities. In addition, the cash provided by operation activities include the whole year rather than a balance at one point. Solvency The solvency ratios for
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